Billionaire Philanthropy is a double-edged sword

The thing about multi-billion dollar philanthropy is that it’s the worst possible system for doing things that governments can’t deal with – apart from all the others.

This is a recurring theme here at Future Perfect. We’ve written about how access to abortion and contraception around the world is funded almost entirely by billionaires—indeed, major and crucial advances in safe abortion and contraception have been developed through billionaire-funded research, not publicly funded research.

We’ve written about how in the early months of Covid-19, billionaire-funded fast grants quickly raised money for promising research on treatments and vaccines, even though the accelerated NIH approval process for funding still left many talented researchers without a chance of getting the money that they needed for the crucial Covid research.

In an article tackling the billionaire philanthropy dilemma, my colleague Dylan Matthews pointed to other past cases, such as Julius Rosenwald, the Sears tycoon who built schools for black kids south of Jim Crow a century ago funded.

The unifying theme: Sometimes the ultra-rich can make sure important work gets done for the people who need it most, especially when the government — and the voters who put them in power — are unwilling to do it.

So that’s the good side. Then there’s the bad side.

Billionaires have high variance

To start a ridiculously successful business in the US these days and not sell it to Google or whoever and quietly retire with a sizable fortune, you have to be an unusual type of person.

Elon Musk’s biggest fans and biggest critics would probably agree on one thing: he’s a particularly vivid example. He’s clearly great at some of the fundamentals of running a business – after all, most people couldn’t put the investor capital he got to use in multiple successful companies in tough industries. He also makes costly, terrible decisions all the time.

It’s entirely possible that these tendencies go hand in hand – the very traits that made him decide he could do space travel better than anyone else were also the ones that made him decide he could tweet an insane solution to the Russian invasion of Ukraine.

And while we’ve weathered a lot of Elon Musk drama surrounding his takeover of Twitter lately, I’d say Musk is unusually visible rather than unusually unique. Many billionaires are weird people, and their shenanigans often affect the rest of us.

Not long ago, many tech company valuations were severely skewed due to the eccentric bets of SoftBank billionaire Masayoshi Son, whose Vision Fund lost $27.4 billion last year. Some of the biggest obstacles to Democratic New York Gov. Kathy Hochul’s re-election were the contributions of Ronald Lauder, a billionaire who may be motivated in part by wanting to destroy a wind farm near his home.

I think Musk’s twitter activity will end up being a lot of sound and rage that means nothing. Twitter will probably be fine. (Or at least as good as Twitter can ever be.) The people who are addicted to it will still be around.

But some of his other decisions were far more significant. He co-founded OpenAI on the principle that AI was a terrifyingly powerful technology, but the company developed unprecedentedly powerful AI systems and made them available to the public. (Musk resigned as chairman of OpenAI in 2018; in the meantime, the company has done a lot of work developing unprecedented systems and is stepping back with the “release” for security reasons and profit interests.)

That’s a big bet on something that could go very, very wrong, and the damage it could do would be far worse than Musk’s efforts to charge people for verification on Twitter.

Where high variance is good – and where it’s really bad

There are some billionaires who I think are doing incredible good, like Bill Gates or Dustin Moskovitz, both of whom have literally saved millions of lives through their global health donations. There are some, like Musk, who manage to do both world-changing good — like Tesla’s invention of the electric vehicle sector — and world-changing bad at the same time. There are some billionaires – lots of them, although they often fly under the radar – mostly trying to elect politicians who represent their interests and lower their taxes.

The point is that there is extremely high variance here. The difference between the best and the worst billionaires is huge.

In some areas the variance is good. For example, when it comes to scientific funding, I think the fact that billionaires are often eccentric and come up with their own theory about what matters when it comes to funding is a definite plus. If they are right, significant advances could occur that otherwise would never have happened. And if they get it wrong, worst case scenario, they lose their money. When the downside is limited, the variance is good.

In some areas, however, variance is extremely damaging. On dangerous technology, for example, I’m not so keen on a world where every billionaire can do whatever they want. I don’t think Musk’s creation of OpenAI was a good idea, and I definitely don’t want billionaires to be able to build super powerful AI systems just because they can.

Likewise, for a small number of people to take down or bail out banks and stock markets is far from ideal, as the cryptocurrency industry seems to be recognizing lately, albeit belatedly. (Disclaimer: Future Perfect was funded by Building a Stronger Future, a family foundation run by crypto philanthropist Sam Bankman-Fried and his brother Gabe.)

That seems like a good rule of thumb for where I’m fairly supportive of multi-billion dollar philanthropy or activism and where I’m against it. Basically, the downside risk is that they’re wasting their money? I’m all for it.

Are they at risk of inflicting costs on tons of other people that we as a society have no way of making them pay for? I’m a lot less excited.

Is there a danger that they will literally kill us all? I’m out.

A version of this story was originally published in the Future Perfect Newsletter. Sign up here to subscribe!


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